Nod for Mitsubishi’s mega project

First, the department has directed the company to first surrender the approval obtained by it from the Reserve Bank of India on March 31 this year for establishing a joint venture with a 51 per cent foreign equity.

Second, the company has been asked to try and set up a manufacturing facility which are internationally competitive.

The project involves 95 per cent equity participation by Mitsubishi Chemical Corporation, leaving only five per cent for the West Bengal Industrial Development Corporation (WBIDC). The project is to be located at Haldia.

The FIPB has forwarded the proposal to the Cabinet Committee on Foreign Investment (CCFI) for its approval.

The joint venture company will have an equity capital of $160 million (over Rs 550 crore) of which Mitsubishi is bringing in $152 million while the balance will be put in by WBIDC.

Mitsubishi would be the first multinational company to challenge Reliance Industries’ monopoly in the PTA segment. Reliance Industries is the only manufacturer of PTA in the country at present with an installed capacity of six lakh tpa. A 3.5 lakh tpa expansion project is under implementation. By the middle of next year, Reliance PTA manufacturing capacity is expected to touch 9.5 lakh tpa.

Though other corporate houses such as Spic and Modern announced plans to set up PTA projects, these could not take off for one reason or the other, allowing Reliance to enjoy a dominant position in the domestic market.